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June 18, 2006 - Freedomain Radio - Stefan Molyneux
57:43
284 Losing Ground Part 1: Facts

A review of the book 'Losing Ground' by Charles Murray

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Good evening. Oh, wait.
No, no. I lie!
Good morning, everybody. It's Steph.
I hope you're doing well. It's 12.30 in the morning on Sunday, June the 18th, 2006, and I just don't think we get to spend enough of the wee hours together.
Isn't that how you feel, too? Perhaps, perhaps not.
Anyway, I am not going to bewail you with my sleep woes, but I've had recently, for reasons I know not, begun to go to sleep late.
This is a thing that just occurs to me.
Sort of off and on in my life.
I just sort of hit these late phases of sleep.
As a kid, I was a light sleeper and a late sleeper, and my natural hours are 2 a.m.
to 10 a.m., savagely and painfully interrupted by the sad necessity of working for a living.
And so what happened was, so last night, I had a working day.
It was Friday night, and I just...
Couldn't fall asleep. And so then what happened was, I went to bed at 11.30 or 12, and then I finally fell asleep at like 4 in the morning, and I woke up at 9.30 and felt great.
And so I've had a very productive day, so I'm not sure exactly.
No, it was 9.30. Yeah, 9.30, 9.45.
So, now, I'm not even going to imagine that I'm going to get to sleep right away.
Christine has fallen asleep. And so, of course, I read a book today, which I thought I would share some aspects of with you, because it's a book that I've been meaning to read for quite a long time, but haven't, and it's called Losing Ground by Charles Murray.
Now, this... It's something that should be updated, I think.
I don't know if it is updated. The version that I have, I ordered, and it came out in 1984.
So this is a little bit of an older book, and the statistics in it are a little bit older, but they're horrifying enough that we should still take note, I think.
And I do appreciate him as a writer, although he frustrates me no end as a thinker.
So he obviously is a good writer, and he really works hard to get the information together, and then from...
What seemed to me very obvious conclusions, he then draws the most obvious evidence.
He then draws the most ridiculous conclusions.
He's a bit like Chomsky in that way, which is that he's very rigorous, more so than I could ever have the patience to be.
So, I mean, it's just a matter of strengths versus weaknesses.
I certainly don't claim to be a superior thinker or anything like that.
It's just that they have particular strengths around data gathering and the patience to grind through all of this stuff.
And I... Don't.
Because I work from first principles, so I don't need as much data.
Because I'm reasoning from first principles, so logistically.
So I don't have the need to bring a tidal wave of data in to get a point across.
However, I certainly have an enormous amount of respect for those people who do gather this kind of data.
So I thought we'd have a quick tour through the book.
And the title is Losing Ground.
And the subtitle is American Social Policy...
1950 to 1980.
I know. It's gripping stuff.
It is. I mean, I'm such a philosophy geek that, for me, these kinds of social experiments are really fascinating to see what they reveal about ethical absolutes, right?
So, to me, the kind of work that Murray put into getting this kind of book out, I think, is quite fascinating.
And the fact is, of course, that you could just look at these, I mean, as they are, You could just look at them and draw a lot of conclusions out of them.
So what we'll do is have a quick tour through some of the facts.
And this is only up to 1980.
Of course, it's quite a bazillion times worse now.
We'll have a quick tour through some of the facts.
Definitely recommend reading the book.
It's a very well-written book.
You can burn through it relatively quickly.
You can lose yourself in lots of geeky charts and notes in the back if you like.
And it's quite fascinating.
And he is a good writer.
He presents his information very well, in my opinion.
So basically, his basic thesis is that 1950 to 1980 represented some sort of quantum change in American social policy, or as he generally would prefer to refer to it, welfare policy.
So, just the money, right?
If he says, just look at the money, right?
He says, just the core programs, federal social welfare expenditures in 1950 alongside 1980, using a constant official definition and constant dollars as the basis for the comparison.
Health and medical costs in 1980 was six times their 1950 cost.
Public assistance costs in 1980 were 13 times their 1950 cost.
Education costs...
We're 24 times their 1950 cost.
Social insurance costs in 1980 were 27 times their 1950 cost.
Housing costs in 1980 were 129 times their 1950 cost.
So overall, civilian social welfare costs increased by 20 times from 1950 to 1980 in constant dollars.
During the same period, the U.S. population increased by half.
Now, he says clearly something went on during those three decades.
That reflected a fundamental change in policy.
And I would not necessarily agree with that, but that's not particularly important to get to at this point.
We'll sort of go through some of the facts, and then we'll get to where I think he goes a little off base later.
Now, Kennedy is considered to be this liberal, right?
From the Democrat side.
So, in his welfare message to Congress in 1962, he wrote...
I'm not going to try and do a Kennedy accent here.
I probably just come off sounding like that guy from The Simpsons.
The goal of our public welfare program must be positive and constructive.
The welfare program must stress the integrity and preservation of the family unit.
It must contribute to the attack on dependency, juvenile delinquency, Family breakdown, illegitimacy, ill health, and disability.
It must reduce the incidence of these problems, prevent their occurrence and recurrence, and strengthen and protect the vulnerable in a highly competitive world.
Now, that's actually quite interesting, because not just last week, I was asked to submit a product plan, because I'm a product line manager in a software company, so I was asked to submit a product plan to the CEO, and...
What I did was I wrote a couple of pages and basically said that I said something like the goal of our software products and services must be profitable and valuable to clients.
It should stress value to clients while at the same time reducing costs internally.
It should be easy to build, easy to maintain, but hard to replicate.
It should integrate with other systems without requiring a lot of costs to do so.
So basically, it was a wish list, right?
Just like this idiot's wish list is as well.
Can you imagine if I handed something like that in as a business document?
I'd get fired.
And rightly so.
But of course, these guys just get lots of books written about them, right?
And get the public ears.
And so his basic thesis, Murray's thesis, is that prior to this 1950 to 1980 time period, there was a sort of general common sense wisdom or consensus which said that charity, as I've argued in a couple of podcasts, is a very delicate and dangerous thing.
Because it's so hard to figure out who's the deserving poor and who's the undeserving poor.
Like, who's the bum at the racetrack who just drinks and gambles his money away and leaves his children to beg on the streets?
And who is the woman whose husband died on his way to mail their insurance check, got hit by a bus, their insurance claim, the signing up for insurance, and just accidentally got hit by a bus, and lo and behold, she's got three kids, and they were trying to do their best, and so on.
So because it's so hard to distinguish between these two, because there's a mimicry, right?
The undeserving poor always want to look like the deserving poor.
So charity was a very dangerous thing.
So in 1950, a family court judge in New York City was colloquially indignant.
Every day, sitting in court, I amass new evidence that the relief setup is sapping the recipient's will to work, that it is encouraging cynicism, petty chiseling, and barefaced immorality.
I guess immorality in a burqa is better.
So there was this general fear that if you just start throwing money at a problem...
Then you end up with more people being poor, you end up subsidizing it, you sort of fundamentally change the incentive structure, which should be what keeps charity chugging along.
Now, what happened was, of course, so Kennedy hands up all of this sort of stuff, right, where he says the New York Times editorialized approvingly about this 1962 memoir, A message to Congress, Kennedy's. President Kennedy's welfare message to Congress yesterday stems from a recognition that no lasting solution to the problem can be bought with a welfare check.
The initial cost will actually be higher than the mere continuation of handouts.
The dividends will come in the restoration of individual dignity and in the long-term reduction of the need.
See, they just make the statements, right?
Imagine me putting forward a product plan that says, it's going to be very expensive to get all these benefits, but the payoffs will be enormous, right?
With no paperwork, no accountability, no responsibility, no math, right?
I mean, nothing like that.
So... What Kennedy proposed in 1962 to Congress is pretty modest.
I mean, by later stance, it's almost atomic, right?
So, yeah, it's a couple of training programs, some rehabilitative efforts, about it to $59 million in the 1963 budget.
But sort of a fundamental shift has gone on, right?
Which is that... The idea now is that you're not just going to hand out money sparingly to people who are in short-term need.
I'm not saying it's all moral, right?
This is sort of the general ethic, though.
But now what's happening is the government is really going to roll up its sleeves and get involved in getting rid of the problem of poverty to begin with, right?
Now, the thing that's very interesting about this, I mean, there's many things that are interesting about this, The amazing thing, and one of the things that Murray says is a possible explanation, the reforms of the Great Society reforms of the 1964 to 1967 period, why did they come then rather than earlier?
Now, one thing that he says is that 1964 to 67 is the first time that America thought that it could afford these programs.
They're very rich, and the American economy has been spectacularly successful.
It stretched back to the onset of the Second World War.
So, in 1940, just before the war years, at least for America, GNP had been less than $100 billion.
25 years later, with an intervening war, it was $685 billion.
It's a seven-fold increase.
Even after discounting for inflation, real GNP had nearly tripled.
But a lot of people don't really see the inflation thing too clearly, and so they think that there's lots of money cooking around and everybody's happy.
So, this is, and it was sort of important to understand that the amount of wealth that was rolling around in America was really quite remarkable.
So from 1961 to 1965, the GMP went from $520 billion to $685 billion in increments of $40, $30, $42, and $53 billion.
The inflation rate was about 1% a year, right?
So this is pretty remarkable.
And in 1966, it was $65 billion, $67, $44 billion, the growth in the GMP. I mean, this is enormous, right?
Slightly higher. Inflation about 3%, but absolutely enormous, enormous increase in the wealth of the country, or increase in the free market generation of profit.
Well, what happened, of course, now...
Well, actually, I'm going to get to my thing sort of a little bit later.
I'll just sort of go on with his thesis.
Poverty really wasn't discussed before the 60s in the way that it was discussed in the 60s, right?
So in the 60s, you start to get the discovery of what's called structural poverty, right?
It somehow profits from by either keeping people down or doesn't have opportunities available to certain kinds of poor people.
Now it's sometimes called systemic poverty.
It's a structural poverty, which is not the American dream.
Everyone is what they want to be.
Nobody's talking about minorities, or at least certainly not blacks at this point.
But we're just talking about the general non-black population.
So... In the general idea of things, you know, you come to America and you're a cab driver and your kid becomes a union worker and your grandkid goes to college or, you know, maybe your kid goes to college or whatever,
right? But there's this leg up situation that occurs and you're a cab driver, not because you can't be anything else, but because you came over when you were older, maybe it was harder to learn English or And maybe you're just pumping all of your resources rather than into your own education, which is somewhat going to be limited, right?
You come over when you're 30 or 40 or whatever.
It's going to be a little tougher.
I thought I'd do a couple of years of night school, learn English, and then start a career.
So maybe you're pouring all of your resources into your kids, and that's why you stayed, you know, a cab driver or whatever.
And this is a stereotypical thing, but I hope you don't mind the generalization.
But the upward mobility is available, it's just that you can choose to partake in it or not, right?
So that's a general pre-1960s idea of America, again, with the exclusion of, I guess, Native Americans and blacks and certain other minorities.
But in general, that's the sort of principle.
But what happens in the 60s is...
There's this discovery of poverty amidst plenty, right?
So this idea that the rising tide is going to lift all boats doesn't occur, as they say, for certain sections of the population.
And that is a very, very interesting thing.
So this guy, Norman Poderetz, recalling the leftist intellectual circles in which he moved during the 1950s, He points out that the essential economic success of the American system was taken as a given, even by those who were most bitterly critical of the social system.
He continues, that there were still pockets of unemployment and poverty, and that there was still a great spread in the distribution of income and wealth, everyone realized.
But the significance of such familiar conditions paled by comparison with the situation that now seemed to defy the rule that there could be nothing new under the sun.
The apparent convergence of the entire population into a single class.
This is sort of the pre-1950s thing.
And so structural poverty then sort of comes around, or is sort of believed to exist.
And structural poverty is that there's a book that came out in 1962 by Michael Harriton called The Other America.
There's this huge population of poor people, like 50 million by his count, living in America, ignored, and the age, the unskilled, the women heading households with small children, and sort of others who are just going to be bypassed no matter how much economic growth occurs because of the way that the system distributed income.
They always have this phrase, that income is distributed, which is complete nonsense, of course.
Income is not distributed.
Income is created. Income is earned.
Income is not distributed.
There's not a big pile of money in the middle of the world and there's a bunch of guys with shovels and wheelbarrows who are just handing it out.
It is created.
It is generated.
Like if you write a book, it's not like some book fairy distributed books to me and to other writers and not to people who are not writers.
It's not like we happen to get books distributed to us that we wrote.
No. We sit down and create it and wrote the books and went through all the hell and hard work of doing that.
Some people like to get published on Lou Rockwell.
Some people don't. But it's not like those of us who get published on Lou Rockwell...
Have had our articles distributed to us.
I mean, we create them and we sell them, I guess you could say.
I don't receive any money for it, but it is very satisfying, I guess you could say.
And so you start to get all of this sort of stuff going on.
I mean, this is the general bureaucratic mumbo-jumbo, and the scare stories were going on all the way through this, right?
So you have the other America, and then about the same time you get Rachel Carson's Silent Spring about the environmental catastrophes and the evils of DDT, and then you get bad Joni Mitchell lyrics.
And then you get natives unsafe at any speed, so there's lots of scare stuff that's going on.
And I'll sort of say what I think is going on at the end of this, but this is very important, that there's this belief now, of course, or growing belief, Where, as Jeremy Larner and Irving Howe put it, in a nation as rich as the United States, it is an utter moral scandal that even the slightest remnant of poverty should remain.
Now, this is important to understand.
This is a change, right? Poverty is not the fault of the individual, but of the system.
The system is what creates and maintains poverty.
It's a pretty new idea in America.
Certainly, it had nothing to do with what America was founded on.
It had nothing to do with the American dream and the American experience, again, with the exception of certain native and black populations.
But... This is Marxism, right?
I mean, this is Marxism, so I've had this sort of thesis for some time, I think I've talked about it in a podcast or so, which is that the GI Bill, after the Second World War, the GI Bill put a lot of American servicemen and young men into, and young women into universities, and of course what happened and young women into universities, and of course what happened was the universities had had a large number of European refugees who came over to teach, and they were socialists and Marxists, so these guys are all taught this Marxist view of society, which we've talked about before, but briefly of course, in Marxism, class defines
which we've talked about before, but briefly of course, in Marxism, class defines consciousness, right, so if you're rich you just think a It's like automatic. It's like you don't think about your femoral artery every day.
It's just part of your body and it keeps you alive and you miss it if it was gone, but you don't think about it.
Marxists believe that the class defines consciousness.
So if you've ever seen the movie...
It's Charlie Sheen who's in it.
So he goes over to Vietnam and he gets off and there's a bunch of poor kids and black kids who are always shoveled off to the dogs of war to feast on.
And they say, what the hell are you doing here, rich kid or something like that?
And he says... Well, I just felt it was my duty, and I felt it was my responsibility to my country, so I quit school, and I came out here, and I did it.
And one of the black guys, I think it is, says, shit, man, you've got to be rich to even think like that.
Now, I mean, it's very unlikely that any...
I don't know how poor grunt is going to talk like that, but the idea, of course, is very Marxist, right?
Which is that this guy's saying, well, I'm having a choice, and so I'm doing the right thing, and the noble thing, and these poor kids just feel like they have no other option, and they just got shoveled into the military or drafted or whatever, so he's coming out here for virtuous reasons and patriotism and so on, and they're saying, well...
You have to be rich to even think, like for that to even be a choice, you've got to be rich.
And that's another Marxist approach to society that the classes are in conflict.
And also, of course, that the owners of capital, those who have the factories and the buildings and the offices and the existing capital infrastructure, want to keep the workers poor, and they want to have large pockets of poor people out there and they want to have large pockets of poor people out there so that they can frighten their workers into accepting bad So if you've got a big pool of unemployed people, when you're an employer, then...
You do very well, right?
Because you don't have to pay as much, right?
So, I mean, I know this just being in the tech world, right?
I mean, making a fortune in the late 90s and early 2000, 2001, then you hit the trough and my income is still about, I think, 25 to 27% lower than it was back then.
Just because there were so many layoffs and a lot of people chasing the same slice of pie, so you just have to accept a smaller piece, and it's harder to get alternative work.
So, you know, is it exploitation?
No, I don't think so. I can still go out and start my own company.
The exploitation, to me, is not having to accept a slightly lower income, but still enjoying my work and feeling well paid, but...
60% of my money being taken from me by force.
That seems to be a little bit more exploitive than it being a soft market.
And of course, the soft market is somewhat related to state power anyway.
We might get into that another time.
It's all the soft money stuff that was going on in the 90s.
It gave us a tech boom, which then crashed in the contraction of money supply.
Anyway, we can sort of get into that another time.
But the Marxists believe that capitalism...
And they don't mean mercantilism, right?
They don't mean feudalism. They sort of very separately categorize that.
But capitalism is a system which benefits from keeping a large number of people out of any kind of security, right?
The more insecure you are as an employee, the less you're going to ask for stuff, the less you're going to be demanding, the more you can be exploited.
If you're asked to work overtime, you do.
If you're asked to travel for a business, you do, because there is no other...
Work out there, or the work that is, is far inferior, and so the boss can tell you what to do, sit up, stand down, jump, get up at 6, go home at 10 at night, whatever he wants.
So this is how Marxist view capitalism as working.
And so, of course, when you get all these people going into higher education in the post-World War period, by the time they reach their political maturity, you know, about...
15 to 17 years later, after they get out of school, right?
You get out of school, you're 22, and when you hit 40 or so, you get to be somebody who moves and shakes things in the political sphere, and of course, they believe, and they sort of drilled this into them by, you know, wise European socialists and Marxists, and American socialists and Marxists,
They believe that capitalism requires this big pool of poor people, and so, of course, it doesn't take them a lot of searching to find what they already believe exists, which is this thing called systemic poverty.
So this is sort of an important thing to understand.
This is not why they did it, right?
This is the cover story.
This is the cover story.
And we'll get to sort of what I think the real reason they did it in a few minutes.
So this is the old Victor Hugo statement from, oh gosh, 120 years ago now.
Victor Hugo said, If a soul is left in darkness, sins will be committed.
The guilty one is not he who commits the sin, but he who causes the darkness.
Now, this is, of course, a very apt thing for Iraq, but I don't believe that it's entirely the case that people who have been lied to and people who have been manipulated and controlled are not morally responsible because then, of course, it's an infinite chain of causality and your parents aren't morally responsible because they were children once and then their parents and blah blah blah.
So that doesn't really work for me, but this is something that sort of exists as a thought now, right?
And... So what happens then is that people start putting all these programs together, right?
So they start putting...
And there's a great rush.
There's a great rush. There's all night sessions and sweaty working groups designing new programs and impossibly short schedules.
This is the kind of stuff that George Stephanopoulos...
That sort of over hairy garden gnome talks about in All Too Human, in his time with Clinton, he's got a list in there that's very funny.
It's a list of everything that he does in a day, which requires like 55 advanced degrees and 12 languages, and I mean, he just considers himself an expert on everything, and I just think that's quite funny, right?
So, what happens is that In the space of a few years, applied social science and especially program evaluation becomes big business, right?
They want to sort of check what they're doing and this and that, right?
So the Department of Health, Education and Welfare, Hugh, spent $46 million on research and development other than health research.
It took three more years.
In 1960, it took three more years for the budget to reach 90 million, followed by sizable jumps in 64 and 65.
In a single year, 66, the budget doubled from 154 million to 313 million.
And this is all very, very interesting, right?
This is how much it's costing them to come up with these kinds of programs, and that is quite something.
Now... What happens then, which to me is very interesting, and we can have a look at this in a little bit of detail.
This is an Oakland project.
And this is exactly how government programs work as a whole.
It's not harmful, I think, to look at a very specific project or program and see a couple of the major turning points and then to see how that can fit to other programs that you know of.
But this is the typical sort of story.
Because what happens is that they find very quickly, they find very quickly in the 60s that this stuff doesn't work, right?
I mean, this is very clear, and this sort of stuff circulates in photocopied handouts.
It's like the summer start of the social sciences.
The community action programs were really, really, really bad.
And it's not surprising, of course, that it wasn't.
But it was very clear very early that it wasn't going to work.
And every project had its own tale to tell about why it failed.
An ambitious city councilman who tried to horn in a borky banker who reneed on a tentative agreement and that sort of stuff.
So there's this fairy tale, right?
It's good and evil and so on.
The failures are universal.
So let's have a look at the Economic Development Administration's Major Employment and Urban Development Program in Oakland.
And this is the subject of a scholarly case study.
This is the sequence. So, boom, the cannons roar, the ribbons are cut, and the program is off.
So the Wall Street Journal of 25th April 1966 had it on page one under the headline, Urban Aid Kickoff.
Administration Selects Oakland as First City in Rebuilding Program.
So they were going to spend $23 million in federal loans and grants.
The program was an assortment of community-run economic development projects bankrolled by the government.
Various incentives were designed to prompt private businesses to invest in the ghetto.
In the short term, so the promises went, 2,200 jobs were to be provided, with more to follow from spin-offs.
These jobs would go to the unemployed residents of the inner city.
So, as far as its national publicity told the story, the program was a great success.
There was a book in bookstores by 68 called Oakland's Not for Burning, which said that the program may have made the difference in preventing a riot in Oakland, because, of course, there were lots of racial riots going on.
In 64, after the Civil Rights Bill was passed and legal equality was inevitable and occurring, then 20 cities were set on fire.
But a year after these stories appear in the LA Times, sorry, a year after these stories appear, the LA Times prints a follow-up story revealing that the activities described in the book and in the New Yorker had in actuality never gotten beyond the planning stage.
All told, only 20 jobs So 2,200 and more from spinoffs, 20 jobs get created.
The program was parked down in bureaucratic infighting.
No shock there.
The authors of the case study, written from the perspective of four years later, concluded that the effect of the project on, quote, despair and disillusionment among blacks was probably to have made matters worse.
I mean, this project wasn't chosen for study as an example of failure.
The study began when hopes were still high.
The Oakland experience was representative, not exceptional.
And the gradual realization of this by those connected with the poverty programs was one source of their dampened hopes for the, you know, give them a hand, not a handout.
It's a hand up! Not a handout, all this kind of stuff.
But this is the pretty typical stuff, right?
Lots of fanfare, lots of publicity, lots of great stories, a couple of anecdotes about, you know, Joe got a job, and no follow-up, and where follow-up does occur, it's completely dismal and pathetic, because, of course, if sustainable jobs could be created and profits could be achieved, then the private sector would be in like Flynn.
It'd be all over it, like a fat kid on a smarty.
Um... Now, Tom Wicker, who's a writer, of course, summed up the implications for policy towards the poor at the same time as the government was sort of figuring out that none of this stuff actually worked, right?
So, he said, he wrote,"...really compassionate and effective reforms to do something about poverty in America would have to recognize first that large numbers of the poor are always going to have to be helped, whether for physical or mental reasons because of environmental factors or whatever.
They cannot keep pace." This column ran on the day before Christmas in 1967.
It was followed by... By only a few months, an announcement from the White House.
Joseph Califano, Principal A to Lyndon Johnson, had called reporters into his office to tell them that a government analysis had shown that only 50,000 persons of the 7.3 million on welfare were capable of being given skills and training to make themselves sufficient.
This is... This is quite fascinating, right?
So you have this huge expansion of welfare rolls, and then the government says, well, only about 1% of them can actually become self-sufficient.
That's quite remarkable, right?
because the interesting thing about the Marxist thing is that if there is systemic poverty, or if the system just is in such a way that the people are kept down, then there's nothing you can do about it.
I mean, you can have a revolution, I guess, and you can behead the leaders of government and pull a Lenin or whatever.
You can put new heads in, but if it's systemic to capitalism or whatever, then you can't do anything about it other than bring about a socialist revolution.
But this is, of course, quite the pattern.
It tells you exactly what the government was up to in not too subtle a manner.
Which I'll talk about again.
I'm going to keep putting this off, but in a few minutes.
Which is that they say, well, we need to put all these welfare programs in place to give these people a hand up, right?
Sort of get them out of poverty, because poverty is a tragedy and it's a moral horror and so on.
We need all this money. And then once they hook people, 7.3 million people on welfare, then they say, oh, by the way, only 1% of them, maybe, could be ever made to be self-sufficient.
So, of course, they get all this money saying we're going to end poverty.
They've got all this money and they say, oh, listen, you know what?
There's just absolutely no possibility that That poverty can be ended now, of course.
That's not going to change anything down the road for anyone.
It's a bait and switch, right?
This is pretty common.
It's sort of stuff in government, so you get this all the time.
Now, of course, we've just been talking about a couple of welfare programs.
A lot more of what's going on.
Once you accept the premise that people's problems are not of their own making but systemic, then everything has to change, right?
So we've got a bit of poverty programs, welfare, the relationship between the state and the working poor, but we also had a whole bunch of stuff going on in education, law enforcement, social services, and so on.
But let's just have a look at sort of one little one, right?
Sort of one that's not too huge.
Which is the disability, the famous disability program.
So the program was established in 1956 and liberalized in 1960.
Of course, originally, they mimicked, right, the people who came up with this stuff before the Marxist intellectuals of the 60s, they sort of tried to reproduce in a bigger scale what charities were doing, right?
So, if you were a woman, you could get your aid for children...
Aid for families with dependent children, right?
So if you're a woman, single mom, then you could get aid for yourself and your children, but not if there was a man in the house, right?
Because you're supposed to be a single mom, right?
So you can't actually get aid for being a widow or a single mom if you're not actually a single mom, but there's a guy living with you.
So that's what charities did, right?
So if you've got a guy living with you, then we're not going to pay you because he can damn well get a job and support you.
Now, when the private charity does this, there's enough hue and cry and so on, but when the government does this, then it's called intrusive and police state and so on, which of course it is, but that's not why people are upset about it, right?
So, when you put disability in, right, then somebody has to be legitimately disabled, right?
So, in 1965, when eligibility was changed...
From permanent, or a long-lasting disability, to a disability lasting 12 consecutive months, that is quite interesting.
Now, what should have happened, of course, since medical advances were going on all the way through the 60s and rehabilitating the disabled, is that since it was put in from 1960 to, say, 1975, the proportion of the population receiving disability insurance should...
Have dropped over time.
But this is what happened from 1960 through the time when the program was subsumed under Supplemental Security Income.
So 1960, the number of disability beneficiaries, 687,000.
That's good, right? I guess.
1965, you have 1.7, a little over 1.7 million.
So it's 153% up in five years.
I guess there must have been a lot of landslides or Exploding factories or something.
1970, we have over 2.6 million, so from 1960, in one decade, it's almost a 300% increase.
1975, 4.3 million, which is 533%, which is really quite remarkable.
During the same period that the number of beneficiaries increased, By 533%.
The number of workers covered by the program increased by?
Yes. Yes, in fact, only 30%.
That's quite remarkable when you think about it.
You can also see, right, the general pattern in food stamps, right?
So food stamps are pretty important as well.
The food stamp program under Lyndon Johnson began with 424,000 participants in 1965.
When Johnson left office, it served 2.2 million people in the first two Nixon years.
The number doubled by the end of the next two.
It had quintupled by 1980.
The number of participants had grown in 15 years from 424,000 to 21.1 million, So 50 times the coverage of the original Great Society legislation and 10 times the coverage of the programs at the end of the Johnson administration.
And it's quite important, I think, to understand just that this is what you always get with government.
It's a cancer, right?
It's a constant increase. So, we have work and training programs, of course.
Under Johnson, you get a high of first-time enrollees of 833,300 in 1967.
Under the Comprehensive Employment and Training Act passed in 1973, annual first-time enrollments ranged from 1.9 million to 4 million, which is quite remarkable, right?
So, between two and a half and almost five times the Johnson peak, that is really quite remarkable as well.
Using constant $1980 as the basis of comparison, we find that during the five Johnson years, fiscal 65 to 69, the federal government spent a total of $66.2 billion on public aid.
This is $30 billion more than was spent during the five preceding years.
It's a pretty large increase.
In the five years following Johnson, public aid spending rose.
By 80 billion. In other words, the increase in the five years after Johnson was 2.7 times larger than the increase from Eisenhower-Kennedy to Johnson.
And this is all 80 years ago, right?
I mean, you start throwing in Social Security and the stuff that's really starting to kick in now, it's going to get even worse.
But it's certainly worth looking at some of the genesis of this kind of stuff and everything that occurred at the beginning of all of this.
Now, there's a chapter which is very good on how, as the funding went up, poverty, which had been reduced very, very significantly in the post-war period, began to climb again, of course.
And that's fairly illuminating, or fairly enlightening, I guess you could say.
But let's continue on.
Now, let's have a brief drop into the cesspool quagmire hellhole of education, which has always been pretty bad, but in the 60s became absolutely horrible, absolutely terrible, especially for blacks.
Absolutely horrible for blacks.
One of the most ghastly things that occurred to that community, I would say, since slavery.
But until 1983, the deterioration of American public education was not considered to be a huge deal.
So in 1981, though, there was a particular fear the Department of Education had identified.
They said, It has to be corrected, so they appointed a national commission over a period of 18 months.
The commission ordered special papers, heard voluminous testimony from educators, parents, scholars, and public officials, and reanalyzed the existing databases.
And this is something that...
This is what the government admits, right?
Now, of course, the government admits horror stories when it wants more funding.
It never admits horror stories as a result of extra funding, which would, of course...
Indicate that the funding should be decreased, but this is what was going on in 1981 to 1983 during this study.
This is sort of what came out.
Nearly 40% of 17-year-olds could not draw inferences from written materials.
Two-thirds could not solve a mathematics problem requiring a sequence of steps.
For a 17-year-old, so these people at 12 years in government schools can't understand written materials, 40% of them, and two-thirds can't solve math problems.
Secondary school curricula have been homogenized, diluted, and diffused to the point that they no longer have a central purpose, whereas in 1964 only 12% of high school students were on a general track, neither vocational nor preparatory to college.
By 1979 that proportion had grown to 42%, tripled in 14 years.
By 1980, remedial mathematics courses constituted a quarter of all mathematics courses taught in public universities.
Remedial mathematics courses, right?
So the universities are inheriting these broken spirits, these broken minds, and have to go around fixing them.
Traditional performance standards had become meaningless as homework decreased and real student achievement declined.
Grades rose, right?
This is sort of important, right?
What's harder for a principal or a teacher to do?
To fight the bureaucracy, to fight the indifference of the students, to fight the union, to fight all the crazy laws, to get better grades out of their students, or to just teach the test?
I mean, it's pretty clear that as homework decreased and real student achievement declined, grades actually rose, right?
So this is how the government solves these kinds of problems.
And I don't blame any particular individual here, but this is just what the system produces, right?
And minimum competency examinations were tending to lower educational standards for all.
So... The commission used a quote from Paul Kopperman to summarize the state of decay it had found.
Each generation of Americans has outstripped its parents in education, in literacy, in economic attainment.
For the first time in the history of our country, the educational skills of one generation will not surpass, will not equal, will not even approach, will not even approach those of their parents.
Now, the fact that the unions were put into schools in the early 60s had a lot to do with this as well.
Now, our good friend Mr.
Murray also talks quite a bit about crime and race and crime.
I'm not going to go into that for too much detail because I think that he's not dealing with the issue that in the 60s you had a lot of teenage boys who obviously committed a lot of crimes relative to other sections of the population.
So I haven't seen that in here.
So there's lots of increases in crime, and the racial statistics are interesting, but he's not talking about the general increase in the teenage population, which always causes these kinds of problems.
The one quote that I do think is interesting...
Put simply, it was much more dangerous to be black in 1972 than it was in 1965, whereas it was not much more dangerous to be white.
Lest this be thought in abstraction, consider the odds.
Arnold Barnett and his colleagues at the Massachusetts Institute of Technology have calculated that at 1970 levels of homicide, a person who lived his life in a large American city ran a greater risk of being murdered than an American soldier in the Second World War ran of being killed in combat.
If this analysis were restricted to the ghettos of large American cities, the risks would be some orders of magnitude larger yet, and larger than it had been ten years.
Before, and that is one of the reasons, of course, why I have some skepticism about whether we won World War II, but we'll get into that another time.
And then we have a section on the family.
Again, very interesting. I'm not going to go into it in too much detail because we're talking a lot more about...
Well, I'll get to my sort of thesis at the end, but there is something interesting about sort of female householder, no husband present, right?
It's very interesting.
So, as of 1950s, this...
There's always been a sort of black-white difference in family composition.
But by the middle of the century, of the last century, sorry, the proportions for whites and blacks, while different, were stable.
As of 1950, decennial census figures show that 88% of white families consisted of husband-wife households compared with 78% of black families.
This is a dream that we can only imagine returning to.
Both figures had remained essentially unchanged since before the Second World War.
The figures for the 1940 census were 86 and 77 percent respectively.
From the beginning of the annual CPS data, which should not be compared directly with the census estimate, through 1967, the black figure moved in a range between 72 and 75 percent, tending to decline.
The figure for white families were pretty unvarying.
In a single year, 68% for black families fell from 72 to 69, the beginning of a steep slide.
In the next five years, the proportion of black husband-wife families dropped another 6 percentage points to 63% by the end of 1980.
The proportion was 59%, a drop of 13 percentage points in 12 years.
During the same 12 years, the figures for whites dropped by 3 percentage points.
This is without precedence.
I mean, this is astounding.
There's really no precedence for that, certainly in American history, that I've ever read of.
But it really is quite remarkable.
Now, he's got quite an interesting chapter that comes after this, where he talks about three premises that were ignored during the creation of the Great Society programs.
The first is...
Premise number one, he says, people respond to incentives and disincentives.
Sticks and carrots work. Well, I guess any economist would tell him the same thing.
Premise number two, people are not inherently hardworking or moral.
In the absence of countervailing influences, people will avoid work and be amoral.
Premise number three, people must be held responsible for their actions.
Whether they are responsible in some ultimate philosophical or biochemical sense cannot be the issue if society is to function.
Well, I wouldn't necessarily say that people must be held responsible for their actions.
It's that people are responsible for their actions.
They must be held as sort of an outside thing.
Now here in this book is well worth buying it just for this section for me.
It was quite fascinating. There has actually been a large multi-year test on this.
I've never ever heard about it.
So I'm going to just...
Spend a minute or two on this.
There was a negative income tax experiment.
Really, really, really quite fascinating.
This was set up in 1965.
Social scientists of all sorts were reaching out from the campus to become part of the excitement in Washington, bringing with them the toolkit of new methods which they hoped to build the Great Society.
And so what they did was they set up this big experiment.
The foundation of the scientific method is the controlled experiment.
So what happens is you take two identical sets of subjects, you expose one but not the other to a specific stimuli or condition or whatever, And you observe the subsequent difference between the two.
So by 1966-1967, the planners at the OEO thought they needed this demanding level of proof.
So what they did was, they created the most ambitious social science experiment in history.
In history! Never heard of it.
Amazing. Well, not that amazing, actually.
No other social science experiment even comes close to size, expense, length, and detail of analysis.
So what happened was, it's called a NIT experiment, it's a negative income tax.
It began in 1968, used almost 9,000 people as subjects, and lasted for 10 years.
It resulted in a body of literature that, as of 1980, included more than 100 published titles and countless unpublished reports.
The cost ran into the millions.
So a negative income tax basically provides payments to people whose income falls below a certain level.
And it really was quite an eye-opening thing that occurred once they put it in.
So the key question was whether a negative income tax reduced work effort.
The answer was, of course, yes.
The reduction was not trivial at all.
It was quite large. It was a negative income tax.
It was found to reduce the desired hours of work by 9% for husbands and by 20% for wives.
Desired hours of work was measured by actual employment after factoring involuntary work reductions out of the calculation.
And you say, oh, well, 9%, is that the end of the world?
Well, 9% for husbands, 20% for wives.
The problem is it's not 9% less work for everyone.
It is the poorest people tend to opt out completely.
And, of course, it's all supposed to be targeted at the poorest people anyway.
So... Not only are the men opting out of the labor market completely, the sort of 9%, but also because in a poor family, the income of the wife, assuming that it's a traditional family, the income of the wife is one of the ways in which the poor family gets out of poverty.
And so the fact that the 20% reduction in work hours for the wives, fairly, fairly, fairly important to understand that that's going to really not help these people get out of...
Poverty at all. The second group of special interests were young males who were not yet heads of families.
They were at a critical age in their lives, about to enter into the responsibilities of marriage and just establishing themselves in the labor force.
If they were to escape from poverty, this was the moment to start.
Well, the negative income tax had a disastrous impact on their hours of work per week, down 43% for those who remained...
Non-heads of households throughout the experiment, down 33% for those who got married.
So that's really quite astounding.
Well, were they going to school?
Nope. Was it a temporary effect?
Nope. The response seemed to be stronger in the five-year experiment than in the three-year experiment.
The investigator summed it up with perhaps excessive restraint.
Quote, the reduction in work effort by male non-heads who became husbands, non-heads, this is just non-heads of households, who became husbands is clearly important.
These males are reducing their work effort at a time when they are undertaking family responsibilities.
Not only is their response involved.
Well... The negative income tax produced striking increases in periods of unemployment.
So what happened was such periods went on.
So if you got unemployed and you had this negative income tax, you were unemployed for nine weeks longer, or 27% for husbands, 50 weeks, or 42% for wives, 56 weeks, 60% for single heads of families in comparison with the control group, right?
So this is quite horrifying, of course.
Does welfare undermine the family?
Well, as far as this negative income tax experiment shows, it does, and the effects are large.
The dissolution of marriages was 36% higher for whites receiving the negative income tax payments than for those who did not.
The figure for blacks was 42%.
In the New Jersey site, there was no difference among the white families in the experiment, but black family breakup was 66% higher in the experimental group than in the control group, and in the Spanish-speaking sample, it was 84% higher In one experiment, Gary, no effect was observed, Gary, Indiana, I guess.
When the researchers looked into possible reasons why, they found that in Gary, Indiana, couples were under the impression that if they split up, they would lose their negative income tax payments.
Now, these figures are bad, I think, but they're not as bad as the welfare state, and Murray is quite clear on this, right?
Right. First, of course, the observed effects are not obtained through a comparison with a pure control group because you have the negative income tax guys who are being compared to everyone who has every other welfare scheme in the world available to them, right?
So you're not comparing those who are in welfare, government welfare programs, and those who are not.
You're comparing those who are in this particular one versus all of the other ones that they could be in or are in.
So that's not particularly valid.
The other thing, of course, is that The great majority of the participants in the NIT experiment, the negative income tax experiment, knew from the outset that they could count on the payments for only three years.
So nobody's going to hose their life completely if their payments are going to stop after three years.
Of course, with the welfare state, the decisions are even worse because, of course, they're not expecting it to go on.
Now another chapter well worth mentioning is Incentives to Fail, Maximizing Short-Term Gains.
This is a very famous chapter for those who've heard about it, and I'm not going to go into it in great detail, but I am going to just sort of mention, because it's well worth the read...
This is the difference in 1960 and 1970.
And basically what it comes down to is that if they end up with $111 per week.
In 1960, if the woman gets pregnant, the girl gets pregnant, they're teenagers, right?
If the girl gets pregnant and the guy marries her and gets a job, then they end up, whether they are married or not married, living together, they end up with $111 per week.
In 1970, what happens is that if Harold is employed and they're living together but not married...
Then they get $270 a week.
This is all the income supplements that they can now get, which they couldn't get in 1960.
So if they live together and the guy is employed, but they're not married, then they get $270 a week.
If they're married, they get $136 a week.
If he's not married, If he's not working, but they're unmarried and living together, then they get $134 a week.
And if they're married, and he's not working, and they're living together, they get $134 a week.
So basically, they're getting paid more, of course, in every situation.
But the optimal situation is to live together, but not be married.
But if you're married and living together, then it's exactly the same whether you have a job or don't have a job, right?
So obviously this is pretty simple, right?
There's no breakdown of the work ethic, right?
This is just a rational choice among alternatives, and we've talked about that before.
It's not like Harold as a teenager and a young father is going to have an enormous amount of Of job satisfaction from what he does, right?
So, real benefits from 1965 to 1970 probably rose like 50%, right?
And it's continued to grow beyond that.
But that really is quite remarkable.
And it's a very famous chapter.
Well, we're having a look at just to understand that people respond to incentives.
They're not dumb. They do understand how this stuff works and how their life should be sort of put together.
And so I'm going to, I guess, take a break.
There's a little bit more to talk about, which I think is interesting.
I'd like to talk a little bit more about my theories, but I don't want to test your patience.
We're going for almost an hour, but...
Definitely worth having a look at this book.
If you can get it from the library, I got this through Amazon.
It's a used bookstore. And this is part of your donations at work.
Thank you so much for listening. I will do part two of this, I hope, tomorrow.
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